What do you know about capitalism, socialism and mixed economy?

Every society has to answer three questions : What goods and services should be produced in the country? How should the goods and services be produced? And how should the goods and services be distributed between people?

The answer to these questions is to depend on the market forces of supply and demand. The market economy is called capitalism.

Capitalism : The economic system in which means of production are in the hands of private entrepreneurs is called capitalism. The management, ownership and control of productive activities are in private hands. They produce goods and services for the profit motive.

In a capitalist society, the goods produced are distributed between people not on the basis of what people need but on the basis of what people can afford and are willing to purchase.

Socialism : In a socialistic economy the means of production are not in private hands. They are owned, controlled and managed by the government. The government decides what goods are to be produced in accordance with the needs of society. The government decides how goods are to be produced and how they should be distributed. The distribution under socialism is supposed to be based on what people need and not on what they can afford to purchase. In a socialistic society, there is no private property since everything is owned by the state.

Mixed Economy : A mixed economy is a combination of both socialism and capitalism. The government and the market together answer the three questions of what to produce, how to produce, and whom to produce. In a mixed economy the market will provide whatever goods and services it can produce well, and the government will provide important goods and services which the market fails to do.